Chinese Flash Mob Shoppers

By consumerist.comMay 17, 2006

Lets get this Chinese export into the US economy by the junkload: the latest craze in China is tuangou, or “team buying.” Consumers find each other online, agree to show up at a store at a certain time and flexing their collective bargaining muscle to successfully demand group-rate discounts. Impactlab reports:

“Bargaining is a way of life in China. Shoppers treat sticker prices as a starting point for negotiations, and it’s a point of pride to strike a tough bargain or walk away if unhappy.”

Whaddya say? Could we see such a phenom thrive on US shores? Or are we too fat, lazy, pussy-willowed and selfish? C’mon Craigslist, et. al., make it happen like kudzu.

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Actually (if you believe it or not), we Americans do bargain quite a bit. Savy shoppers of automobiles, houses and diamond rings know the value of being able to walk away if the deal isn’t good enough.

The difference between us and the Chinese is that they treat EVERY sticker price as a starting point for negotiations. Thus, even picking up a slab of meat for dinner or that bottle of laundry detergent is up for negotiations. Granted bargaining for them is embedded in their culture to the point it’s expected in everyday transactions.

To the point of team bargaining, that is certainly no surprise to me that chinese shoppers would bring that about. However, it’s very unlikely that this tactic of “team buying” would ever work state side.

First, while some retailers might give in, it’s unlikely that Corporate America (the companies that make said goods versus the middle men who sell them) would give in the small guy even if the small guy has numbers. And second, it takes a huge ammount of willpower and dedication behind the masses to truely demand lower group rates. We’re talking about a unified front of a significant amount of buyers/buying power to buckle any retailer.

That being said, I’d personally love to see this sort of team buying/boycott on any big (read hot) Christmas item this year. Say the overpriced but probably greatly sought PS3?

The article cited the lack of success of online group-buying ventures
like Mercata on this side of the Pacific during the dot-com boom, but
what these companies did was burden themselves by actually buying
products in bulk and then having the responsibility of carrying and then
needing to shed the inventory. (see “Does Group-Shopping Work?
The economics of Mercata and Mobshop.” http://www.slate.com/id/86925/)

That wasn’t the power of the mob. I think what is attractive is the
facilitation of _communication_ between buyers. These consumers who are
otherwise independent actors can effectively team up to make a bulk
purchase on big ticket items. Instead of 20 guys and gals individually going to their local haggle-friendly electronics store (or car dealership, etc.) to seek deals on plasma TVs (or Honda Civics, etc.), imagine how excited a sales manager might get knowing he or she can move a dozen units with a “single” sale. And while critics of team buying say that American consumers don’t want to wait when they can click and shop from the comfort of their home, I think for these larger items, some of us might actually take the time to organize amongst ourselves, save big bucks, and bring the items home on our own.

On a much smaller scale, a site that connects group buyers could even hook up single shoppers looking to buy things together at Costco/Sam’s Club/etc.–for those folks who don’t really need 4 cartons of OJ or 24 rolls of TP all at once. I know, it seems trivial here and there, but multiply these instances by hundreds or thousands of users and you have a lot of money being saved for not a lot of effort. At the same time, retailers move more product quickly. Everyone wins.

Anyway, I created a website a few months back with the intention of
starting a stateside tuangou revolution at http://foonie.com. It’s more
conceptual than anything right now as it’s just a basic bulletin board.
But I think the readers of Consumerist might be able to take advantage
of a site dedicated to the concept of team buying. Sign up, discuss,
and let’s take Foonie.com to the next level!

Yeah, I mean while conceptually this is cool, if you look at the economics, if this wrangling behavior is widespread, it can lead to inefficiences elsewhere, especially as stores raise prices in advance to compensate for the inevitable haggling.